Tag Archives: MasterCard

News Digest: September 20, 2012 报摘： 2012年9月20日

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The following press releases and media reports about Chinese companies were carried on September 20. To view a full article or story, click on the link next to the headline.
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  • MasterCard (NYSE: MA) Debuts First Single-branded Cards in China with Citibank (Businesswire)
  • Ctrip (Nasdaq: CTRP) Prices Offering of $160 Mln Convertible Senior Notes (PRNewswire)
  • Nexen (Toronto: NXY) Takeover by CNOOC (HKEx: 883) Faces Political Test in Canada (English article)
  • ZTE (HKEx: 763) to Release First Phone Based on Firefox OS in Q1 Next Year (Chinese article)

China Ends UnionPay Monopoly 中国结束银联垄断

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Beijing made the right decision last week in deciding not to oppose a World Trade Organization ruling that it unfairly supported its domestic UnionPay financial transactions network at the expense of foreign rivals like MasterCard (NYSE: MA) and Visa (NYSE: V). Now it needs to show it is prepared to wean its other big industries from unfair state support, starting with the unrelated solar energy sector that has recently become a major source of friction between China and its major trading partners.

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UnionPay Gets Setback in WTO Ruling WTO裁定中国银联垄断

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In what looks like a big setback for UnionPay, the World Trade Organization has ruled that the financial services network operator has an illegal monopoly that unfairly locks rivals like MasterCard (NYSE: MA) and Visa (NYSE: V) out of the market for settling financial transactions denominated in China’s currency, the renminbi. But while this ruling may represent a victory for Visa and MasterCard in the longer term, I have no doubt that the decision will be meaningless for at least the next few years, as Beijing, even if it decides to comply with the ruling, erects bureaucratic obstacles to make sure that UnionPay maintains its monopoly status for now.

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MoneyGram In Latest Financial Services Move 速汇金携手中行 提供汇款服务

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After years of watching the major global banks first pile into China only to more recently retreat, it’s refreshing to see a new wave of lower-key investments and tie-ups coming into the country again from second-tier players with more realistic expectations for the market. The latest in this string of lower-profile deals has MoneyGram (NYSE: MGI) signing a deal to provide its specialty money-transferring services through Bank of China’s (HKEx: 3988; Shanghai: 601988) more than 10,000 branches nationwide. (company announcement) The deal sharply expands a previous tie-up that had the pair offering MoneyGram’s services at a much smaller 240 Bank of China branches in Beijing, and is clearly targeted at the growing number of Chinese living overseas, who now send an estimated $57 billion home each year. The deal follows another similar expansion of a tie-up between MoneyGram and ICBC (HKEx: 1398; Shanghai: 601398), another of China’s top 4 banks, aimed at money transfers between Japan and China. Other interesting lower-key deals in recent months have included an investment in a domestic electronic payments company called Lianlian by American Express (NYSE: AXP) (previous post), and several major tie-ups between foreign banks with UnionPay, China’s operator of a financial settlements network similar to the Cirrus and Plus networks operated by MasterCard (NYSE: MA) and Visa (NYSE: V). PayPal, the electronic payments arm of online auctions specialist eBay (Nasdaq: EBAY) has also indicated it wants to delve further into China’s domestic e-payments market, stating very clearly on several recent occasions that it has applied for a new round of licenses soon to be offered for such services. (previous post). While names like MoneyGram, PayPal and even American Express aren’t as high-profile as the more familiar global banking giants, their quieter and relatively cautious advance is a refreshing and strong contrast to big names like Citigroup (NYSE: C), Bank of America (NYSE: BAC) and Goldman Sachs (NYSE: GS), which have all recently  retreated from a market that all previously hyped as full of potential with its billion-plus consumers. Citi recently sold its long-held stake in a regional Shanghai bank, while Bank of America and Goldman have sold off most or all of their stakes in China Construction Bank (HKEx: 939; Shanghai: 601939) and ICBC, respectively. (previous post) Citi, Bank of America and Goldman were all quite bullish on China’s potential when they made their investments around 5-6 years ago; but since then they’ve discovered the tie-ups didn’t really help them to build up their China presence, and most finally sold their stakes to raise cash to bolster their balance sheets after the global financial crisis. I personally think these smaller, more targeted investments from the likes of MoneyGram, American Express and PayPal are much more realistic than the bigger headline-grabbing purchases of the big global banks, and would fully expect to see an acceleration in similar moves from other smaller global players in the next 2 years.

Bottom line: MoneyGram’s latest tie-up with Bank of China looks like a smart, targeted play at China’s financial services market, with more smaller, low-key deals likely in the next 2 years.

Related postings 相关文章:

◙ AmEx Chases E-Payments With Lianlian Link 美国运通联手中国连连集团

◙ Goldman Flees ICBC as Bank Crisis Looms 中国银行业危机隐现 高盛迅速转让工行股票

◙ New UnionPay Tie-Up Boosts US Presence in IPO Run-up 中国银联携手US Bancorp 未来有望两地上市

UnionPay Stirs IPO Pot With Big Numbers 银联有望上市

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UnionPay, China’s equivalent of Visa (NYSE: V) and MasterCard (NYSE: MA), is making headlines today with some impressive numbers showing its profit has exploded in the last few years, as it looks to highlight its growth story in the run-up to what could well become the blockbuster Chinese IPO of the year. Of course this is all just my guessing, as UnionPay, whose stakeholders include most of China’s major banks, has never given a detailed timeline for such an offering, which I would expect to come as a dual listing in Hong Kong and Shanghai as soon as the second half of this year. Such an offering would have huge appeal for investors, as it would offer a strong financial services alternative to China’s big banks, which often behave more like policy lenders than true commercial banks and, as a result are now in the midst of a crisis after sharply boost their lending under a directive from Beijing at the height of the global financial crisis. By comparison, UnionPay operates a national electronic payments settlement network similar to the Cirrus and Plus networks operated by MasterCard and Visa, which is much less vulnerable to the whims of government policy. UnionPay has also been aggressively expanding the network globally, leveraging its strong base in China to sign a steady stream of major agreements to extend its network to major global banks and other financial services firms. One of the latest moves in that direction saw the company sign a deal last August to link its network with US Bancorp (NYSE: USB), a top US player, and more recently it inked another deal with another US company called WorldPay. That aggressive expansion and the growth of the financial services industry in China is apparent in UnionPay’s bottom line, which has grown 10-fold over the last 5 years as its profit reached just over 1 billion yuan in 2011, or about $160 million. (Chinese article) According to a Chinese media report, UnionPay, which just celebrated its 10th birthday, made the profit on about 6 billion in revenue, and the company now has some 13.8 billion yuan in assets. The report says that UnionPay’s stakeholders are expressing some dissatisfaction with the level of their dividends from the company, a sign that they want to see more cash returns from this highly profitable investment as they face their own cash crunches following the 2009-2010 lending binge that was part of Beijing’s 4 trillion yuan economic stimulus plan during the global financial crisis. As a result of that binge, many of the big banks are now facing a looming surge in bad loans, and have turned to capital markets to raise more funds to shore up their balance sheets. (previous post) Against that backdrop, a multibillion-dollar IPO for UnionPay looks all but inevitable, providing the banks with a better return on this highly profitable investment, as well as some much needed cash.

Bottom line: UnionPay could make a multibillion-dollar IPO by the end of this year, capitalizing on its explosive growth and a need for cash by its major stakeholders.

Related postings 相关文章:

◙ China I-Banks Zero In on Piper Jaffray 中国投行聚焦美国派杰

◙ New UnionPay Tie-Up Boosts US Presence in IPO Run-up 中国银联携手US Bancorp 未来有望两地上市

◙ E-Payments: Lots of Noise But Little Space

 

E-Payments: Lots of Noise But Little Space

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There’s been lots of noise in the electronic payments space lately, as China gets ready to issue its second round of licenses to domestic players (Chinese article) and accepts applications from foreign firms (Chinese article), with eBay’s (Nasdaq: EBAY) PayPal most prominent among those applying. (English article) Into that mix we can also add this week’s news that Alipay, the e-payments arm of Alibaba Group, has purchased the China assets of OnCard Group International (Sydney: ONC), a small Australian firm that specializes in payments for plane tickets. In my view, all this noise is exactly that: lots of noise with little or no importance for the future. When you look at developed markets like the US or Europe, e-payments in both areas are dominated by credit card issuers Visa (NYSE: V) and Mastercard (NYSE: MA), which also own the top global electronic networks linking up many of the world’s banks. The only niche player that has come even close to competing with them is PayPal. So let’s translate that equation to China. In terms of Visa and MasterCard equivalents, the clear parallel is UnionPay, which operates a similar network and is backed by all of China’s top banks. (previous post) That means that MAYBE there is room for one or two more players at the most, meaning all these licenses now being awarded will ultimately be meaningless. PayPal would clearly like to take a similar position in China to its global position, and AliPay is certainly a leading candidate to become a major player, drawing on its tight connections to Alibaba.com (HKEx: 1688), China’s B2B commerce leader, and Taobao, a leading B2C site. AliPay’s acquisition of OnCard’s China assets looks interesting, until one looks further and sees that OnCard itself is a tiny company with a market cap of only $30 million. But regardless, look for nearly all of these new e-payment licenses to be business dead-ends, with only one or possibly two players surviving in a space that will ultimately be dominated by UnionPay and credit card issuers like Visa and MasterCard.

Bottom line: China’s electronic payments sector will ultimately be dominated by UnionPay and other credit card companies, leaving most other e-payments licensees bankrupt.

Related postings 相关文章:

◙ New UnionPay Tie-Up Boosts US Presence in IPO Run-up 中国银联携手US Bancorp 未来有望两地上市

◙ 360Buy Cuts Off Alipay As China Internet Froth Builds 京东停用支付宝印证中国互联网泡沫

◙ Alibaba in Alipay Deal: Jack Ma Wins Again 支付宝股权纷争尘埃落定 马云公关赚钱两不误

New UnionPay Tie-Up Boosts US Presence in IPO Run-up 中国银联携手US Bancorp 未来有望两地上市

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Despite an ongoing high-profile dispute with global credit card leader Visa (V.N), leading Chinese credit and debit card transaction processor UnionPay is pushing ahead with its plans to become a top global player, signing a new tie-up with US Bancorp (NYSE: USB), the fifth largest US bank. (English announcement) The deal, which comes not long after a similar tie-up between UnionPay and Visa’s closest global rival MasterCard (NYSE: MA), will see UnionPay cards accepted by some 1 million US and European merchants who use US Bancorp’s Elavon financial network. The deal should come as a nice boost not only to UnionPay and its stakeholders, which include China’s top banks, but also to hotels, restaurants and other US shops on the Elavon network, which will now be able to accept credit and debit cards from the growing tide of Chinese traveling to the US and Europe for business and pleasure. This deal is the latest in a growing string of similar tie-ups for UnionPay over the last two years, as it looks to set up a global network to rival those of Visa and MasterCard, leveraging the growing spending power of consumers in its home China market where it has a monopoly on credit and debit card transaction processing services. The company is growing rapidly, with a profit of 972 million yuan, or about $150 million, last year, up 30 percent from the previous year. A recent small share of its sales valued the company at more than $11 billion. With growth potential well above that of its major stakeholders, I suspect UnionPay will make a dual IPO in Shanghai and Hong Kong in the next 12 months, as its major shareholders, which include leading banks ICBC (HKEx: 1398; Shanghai: 600398) and China Construction Bank (HKEx: 939; Shanghai: 601939), look to raise more cash to bolster their shaky balance sheets. Such an offering could be one of the hottest in quite a while, as investors flock to a company with the clearest potential to take advantage of the growing spending clout of Chinese consumers.

Bottom line: UnionPay’s latest tie-up with US Bancorp will give the company a nice boost in the US and Europe, in the run-up to a blockbuster IPO in the next 12 months.

中国银联与全球信用卡领头羊维萨卡(Visa)的高调纠纷尽管还在继续，但这一中国主要的信用卡交易处理商正致力发展成为全球顶级运营商的宏图大计，与美国第五大银行US Bancorp(USB.N) 签署了新的合作协议。前不久，中国银联和Visa的宿敌万事达卡(MA.N)刚刚达成类似的合作协议。该协议将使中国银联卡被大约100万使用US Bancorp金融网络的美欧商户所接受。该协议不仅对中国银联及其股东是个推动，也有利于使用US Bancorp的Elavon结算平台的酒店、宾馆和其他美国店铺，他们将能接受来自中国游客的信用卡和借记卡消费。这也是中国银联过去两年一系列合作项目中的最新一起。中国银联垄断着中国国内的信用卡和借记卡交易处理服务，中国银联希望凭借中国国内消费者日渐增长的消费力为杠杆，建立一个全球性网络，抗衡Visa和万事达卡。中国银联的发展速度很快，去年的利润达到了9.72亿元(约1.5亿美元)，同比增长了30%。由于其增长潜力远远好于主要股东的业绩，我认为，中国银联在未来12个月将寻求在上海和香港进行两地上市，因包括工商银行(601398.SS)(1398.HK)、建设银行(601939.SS) (0939.HK)等在内的主要股东希望筹集更多资本支持自身摇摇欲坠的资产负债表。类似IPO可能会是相当长一段时间内的热门投资之一，因投资者将涌向一个明显有潜力利用中国消费者消费力的公司。

一句话：中国银联和US Bancorp的最新合作将使银联在美欧市场获得良好发展，为未来12个月的重量级IPO作好准备。

Related postings 相关文章:

◙ China Merchants Bank Kicks Off “Capital Raising II” 招商银行掀起第二轮融资热潮

◙ Hilton, Starwood Roll Out Welcome Mat for Chinese 喜达屋、希尔顿迎合中国消费者

◙ ICBC Sees Potential in Argentina 中国工商银行：阿根廷市场有潜力